NCLAT sets aside NCLT order permitting consideration of Kapil Wadhawan’s settlement proposal

The National Company Law Appellate Tribunal (NCLAT) set aside the order of the National Company Law Tribunal, Mumbai, which directed the administrator of Dewan Housing Finance Corporation Ltd. (DHFL) to place the second settlement proposal sent by Kapil Wadhawan before the Committee of Creditors (CoC)..The order came on a batch of petitions filed by Union Bank of India (on behalf of the CoC), DHFL’s administrator and Piramal Capital & Housing Finance (successful resolution applicant) challenging NCLT’s order..While setting aside the NCLT order, a Bench of judicial member M Venugopal and technical members VP Singh and Dr Ashok Kumar Mishra held that “the said exercise was beyond the jurisdiction of the Adjudicating Authority (NCLT) hence unsustainable and liable to be set aside”.It observed that the directions passed by NCLT came despite the fact that CoC already approved the resolution plan submitted by DHFL by an overwhelming majority and the plan approval application filed by the administrator had been reserved for orders by the Adjudicating Authority..Citing the ratio of the Supreme Court in the case of Ebix Singapore, the NCLAT observed that there was no scope for negotiations between the parties once the CoC has approved the resolution plan.“Once the Resolution Plan is approved by a 100 per cent voting share of the CoC. The jurisdiction of the Adjudicating Authority was confined by the provisions of Section 31(1) (of Insolvency and Bankruptcy Code) to determining whether the requirements of Section 30(2) have been fulfilled in the plan as approved by the CoC,” the NCLAT order said..The NCLT had initiated insolvency proceedings against DHFL in 2019 on the application filed by the Reserve Bank of India claiming a default in repayment of the External Commercial Borrowing (ECB) loan to the State Bank of India (SBI)..In 2021, on an application filed by Wadhawan seeking orders to have his second proposal considered, the NCLT recorded that the proposal offered by Kapil Wadhawan was substantially higher than the value of the highest bidder, and hence the same was required to be considered.It allowed Wadhawan’s application holding there appeared to be procedural irregularity in not considering a settlement proposal which is around 150 per cent higher value of the approved Resolution Plan.This order was set aside by NCLAT on January 27, 2022..Solicitor General Tushar Mehta with advocates Raunak Dhillon, Animesh Bisht, Saloni Kapadia, Madhavi Khanna, Shubhankar Jain, Isha Malik and Fatema Kachwalla appeared for the CoC.Advocates Ashish Bhan, Ketan Gaur, Chitra Rentala, Aayush Mitruka, Kaustub Narendran, Samriddhi Shukla, Lisa Mishra and Vishal Hablani appeared for Piramal.Adocates Liz Mathew, Sonali Jain, Rohan Rajadhyaksha and Naveen Rath appeared for the Administrators.Advocates Ashish Kamat and MF Philip appeared for the RBI.[Read order]